Mark Carney faces a revamped Treasury committee on Tuesday. The Bank of England governor will no doubt be relieved by the departure of Jacob Rees-Mogg, who criticised the Bank’s comments during the Brexit referendum campaign, to Carney’s evident irritation.
Labour’s ultra-direct John Mann is still there but former chairman Andrew Tyrie, who stood down as an MP in June, has been replaced by Nicky Morgan. The Conservative former education secretary has big shoes to fill – Tyrie built a reputation as a forensic, independent inquisitor.
Early signs are promising. Philip Hammond’s remarks at last week’s session,, Morgan’s first in the chair, inflamed Brexit fanatics and Morgan has spent the summer making demands of regulators and the government. So Carney should be on his guard. Economists will leap on any remarks he makes about interest rates. The BoE has hinted that it will increase rates next month for the first time since the start of the financial crisis.
Inflation figures for September will be published the morning of Carney’s appearance. Prices rose at an annual rate of 2.9% in August, helping prompt talk of a rate rise. But consumers are stretched, banks are tightening lending and Brexit looks perilous for the economy. What does it all mean? Over to you, governor.
Former Lloyds bosses in court
If it sometimes feels like the financial crisis never really ended, get ready for a court case featuring some familiar characters. A group of Lloyds shareholders are suing the bank and its former management for £600m in losses they allege were caused by its rescue acquisition of HBOS at the height of the crisis. The case, due to start on Wednesday, is expected to force five ex-directors to give evidence.
They include Sir Victor Blank, who was chairman at the time of the deal, and Eric Daniels, his chief executive. The shareholders – about 5,700 individuals and 300 companies – argue they would not have approved the takeover if they had known that HBOS was being propped up by the Bank of England and the US Federal Reserve.
Lloyds agreed to buy HBOS, the parent of Halifax and Bank of Scotland, in September 2008 in a deal brokered by Gordon Brown, then prime minister as the banking system neared collapse. The government took a 43% stake in the combined bank that has now been sold off.
Fred Goodwin, the former Royal Bank of Scotland boss, escaped the witness box in June when RBS settled with shareholders. Blank and Daniels must hope the same happens to them.
Energy firms feel the heat
Parliament’s select committees have become a valuable source of information about business and the economy. Committees’ powers to punish witnesses who mislead or withhold information aren’t clear, but most cough up what they are asked for.
On Tuesday the business, energy and industrial strategy committee will seek answers on high household energy bills. Among the witnesses will be Sarwjit Sambhi, who runs British Gas’s home business, and Dermot Nolan, chief executive of the energy regulator Ofgem.
On Thursday the government’s draft bill announced an absolute cap on 12m standard variable tariffs rather than one set at a percentage over the cheapest fixed deal. Some campaigners argued this would push all prices up towards the cap. The legislation is unlikely to take effect until next winter.
A record 163,000 customers left the big six providers in September, prompting the industry to claim competition was flourishing. But Rachel Reeves, who chairs the committee, warned: “We want to probe energy companies and the regulator about these proposals and ensure that the reality of a price cap can match the rhetoric by delivering lower bills for consumers and fixing the broken energy market.”
